Capital market consequences of audit partner quality

Daniel Aobdia, Chan Jane Lin, Reining Petacchi

Research output: Contribution to journalReview articlepeer-review

70 Scopus citations


This paper examines whether the identity of the individual audit partners provides informational value to capital market participants beyond the value provided by the identity of the audit firms. Using data from Taiwan, where firms are mandated to disclose the names of the engagement partners, we find a positive association between the partner's quality and the client firm's earnings response coefficient. We also find a positive market reaction when a firm replaces a lower quality partner with a higher quality one. Moreover, we find evidence that firms audited by higher quality partners experience smaller initial public offering (IPO) underpricing and are able to obtain better debt contract terms. Overall, these results suggest that the quality of engagement partners matters to capital market participants.

Original languageEnglish (US)
Pages (from-to)2143-2176
Number of pages34
JournalAccounting Review
Issue number6
StatePublished - Nov 2015


  • Audit quality
  • Capital market consequences
  • Individual auditors

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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